Hitachi leads rare earth recycling efforts as China cuts access to supply
It takes two Hitachi Limited workers 8 minutes to slice open the metal casing of the used air conditioner compressor. The prize inside 4 wafers thin magnets containing about 30 grams of rare earth metals.
Hitachi of Japan uses as much as 600 tonnes of rare earth metals each year in products including motors like those in Toyota Motor Corporation’s Prius hybrid. Hitachi is one of hundreds of manufacturers depending on rare earth shipments from China which controls 97% of world supply of the lightweight, malleable metals essential to hybrid cars, cell phones and hard disk drives.
China’s decision this year to slash exports of the metals has driven up prices and spurred a drive among Japanese companies, the world’s biggest users of rare earths to find other supplies. While trading houses Sojitz Corporation and Sumitomo Corporation consider investing in mines outside China, Hitachi said that it expects recycling to meet 10% of its needs by 2013 from almost zero now.
Mr Kenji Baba GM of Hitachi’s resource recycling office said that “We need to make sure we have a stable supply of these materials and recycling is part of that. We have to work on bringing costs down.”
1. Ready for Harvest
Inside a warehouse in Matsudo City, Hitachi demonstrated the results of the 1 year, USD 1.5 million research project partly funded by Japan’s government. Four refrigerator-sized devices use saws to open up compressors without damaging the rare earth magnets inside. A separate conveyor belt feeds disk drives into a machine about the size of a ship container. The drives come out the other end in pieces ready for rare earth harvesting.
Hitachi, whose shares have gained 49% this year said that the machines are the first of their kind. The shares rose to their highest since December 2008 closing on the Tokyo Stock Exchange at JPY 420 up 1.7%. Last year, China’s government clamped down on its rare earth industry, setting production quotas to bolster prices. China said in July this year it would reduce export quotas 72% in the second half to supply its own electronics industry and overhaul a mining sector blamed for causing widespread environmental damage.
2. Rising demand
The drop in output and exports combined with rising demand caused the price of neodymium used in batteries for the Prius to surge fourfold to USD 80 per kilogram from USD 19.12 in 2009. Lynas is building AUD 550 million rare earths mine at Mount Weld in Western Australia.
Sojitz, one of Japan’s biggest importers of rare earths, last month agreed with Lynas to buy 8,000 tonnes to 9,000 tonnes annually from its Mount Weld mine over the next 10 years.
Mr Mitsushige Akino who oversees about USD 450 million in assets at Tokyo based Ichiyoshi Investment Management Company said that China’s monopoly isn’t going to hold up because prices are high enough now to make it worthwhile for other people to get into the business.
Rare earths are a group of 17 metal elements used in batteries, permanent magnets in wind turbines and cell phones and catalysts to reduce auto exhaust emissions. Besides Hitachi’s project, Tokyo based chemical maker Showa Denko KK in May opened a plant in Vietnam to begin recycling dysprosium and didymium metal used to make magnetic alloys. The company, the world’s biggest producer of some components used in hard disk drives makes 8,000 tonnes of the alloys a year and plans output of 800 tons at the recycling factory.
3. Reducing Costs
Copper processor Mitsubishi Materials Corporation which has recycling ventures with Panasonic Corporation and Sharp Corporation last year started researching the cost of extracting neodymium and dysposium from washing machines and air conditioners.
Mr Isato Matsubara spokesman at the company said that we’re trying to reduce costs by automating the process. How profitable the business can be depends on the prices of materials and getting our costs down.
Sumitomo Corporation said that it’s considering an investment in US based rare earth miner Molycorp Inc. An investment by Sumitomo which the company said is one option being considered, would give it access to the world’s largest known deposit of rare earths outside of China at a mine in Mountain Pass, California.
4. Flooding the market
Molycorp raised USD 394 million in an initial share sale in July to reopen the mine. It was closed in 2002 as China output flooded the market and drove down prices. The company will export half of its rare earth metal shipments to Japan in 2010.
Toyota Tsusho Corporation the trading company part owned by Toyota will build a rare earths plant in India that will help secure supplies from 2012. The plant in Orissa province will provide 3,000 metric tons to 4,000 tons of the metals a year.
5. Processing
Hitachi’s Baba said that for recyclers, extracting components is the first step. Magnets from air conditioning compressors are 25% rare earth metal and a chemical process is needed to refine out the rare earths. We’ve succeeded in processing the metals in small quantities without using acids. Now we’re working on methods to increase the scale.
Mr Ali Izadi Najafabadi Tokyo based analyst said that even China’s supply is not unlimited, some of the heavy rare earths it has will only last about 15 years. So if we’re going to have a clean energy revolution and electric vehicles and other things, recycling would have to be part of the infrastructure.
(Sourced from Bloomberg)